LMT vs HWM: Defense Spending Boosts Stocks

What happened: The U.S. Department of Defense proposed a $1.5 trillion budget for 2027, with over $600 billion earmarked for military hardware, benefiting companies like Lockheed Martin, Boeing, and General Dynamics. This comes amidst a sustained demand for defense stocks due to depleted stockpiles and a decade-long spending plan. Meanwhile, defense contractors like Textron and Huntington Ingalls have seen their stocks surge by at least 38% this year, driven by multiyear backlogs. Lockheed Martin and Howmet Aerospace, both beneficiaries of increased defense spending, reported record revenues in 2025.

Market impact: The defense sector has seen a boost, with defense stocks like Lockheed Martin, Boeing, and General Dynamics rising. The First Trust Indxx Aerospace & Defense ETF (MISL) holds top positions in companies controlling critical weapons systems, further driving demand. Analysts have lifted price targets for General Dynamics and Lockheed Martin, with Morgan Stanley upgrading General Dynamics to 'Overweight' and Susquehanna downgrading Lockheed Martin's price target but maintaining a 'Buy' rating.

What to watch next: Investors should monitor the 2026 U.S. defense budget approval process, which will confirm the long-term spending plan. Additionally, earnings reports from defense contractors such as Lockheed Martin (scheduled for April 26) and General Dynamics (scheduled for May 3) will provide insights into their financial health and growth prospects. Lastly, geopolitical developments, particularly around Iran, could influence defense spending and stock performance.